Environmental Protection (Chain of Responsibility) Amendment Bill 2016

In response to the circumstances surrounding the administration of the troubled Yabulu Nickel Refinery, the Queensland Environment Minister introduced the Environmental Protection (Chain of Responsibility) Amendment Bill 2016 (Bill) on 15 March 2016.

Extension of liability for environmental risk and harm

The Bill proposes to strengthen the powers of the Department of Environment and Heritage Protection (DEHP) in issuing environmental protection orders (EPOs) to entities and individuals connected with the licensed operating entity.

An EPO issued by the DEHP will ordinarily require the recipient to take steps to remedy a risk or prevent further environmental harm. Failure to comply with an EPO within the stipulated timeframe is an offence, carrying significant financial penalties (up to approximately $765,000 for an individual, and $3.7 million for a company), and the possibility of up to five years in jail, in addition to compliance costs which may be recovered by the DEHP.

The Bill proposes to give DEHP the power to issue EPOs to a broad range of ‘related persons’ of the responsible entity, such as:

  • Any person who holds a position of influence within the company, or has done so at some point during the two years prior to the issuance of the EPO;
  • A shareholder of the company;
  • A financier of the company; and
  • An owner of land on which the company carries out an environmentally relevant activity.

The draft transitional provisions will give the DEHP retrospective powers to issue EPOs to any party who was a related person when the Bill was introduced on 15 March 2016 (even if that party is no longer a related person if and when the amendments are passed).

Other proposed amendments

Other amendments to be introduced on passage of the Bill include:

  • Changes to give the DEHP the ability to impose new financial assurance obligations upon the transfer of an environmental authority (even in the absence of any non-compliance or irregularities);
  • A proposal to make it more difficult to for a court to grant a stay of a decision to introduce an EPO, or a decision about the level of financial assurance required; and
  • Changes to preserve rights of access to legacy sites.

What are the implications?

In introducing the Bill, Minister Myles stated that the Queensland Government intends to:

‘Ensure that operators continue to meet their environmental responsibilities, even in situations of insolvency or financial difficulty, and that clean-up costs are not borne by the Queensland taxpayer.’1

The changes proposed by the Queensland Government are certainly wide reaching, and could carry significant unintended consequences.

The environmental protection regime in Queensland straddles all industries and sectors, from mining to food processing, agriculture to textile manufacturing. Anyone currently considering investing or lending to a holder of a Queensland environmental authority must now reassess the potential personal exposure that could arise out of such an arrangement.

These proposed changes could deter an investor from supporting a start-up aquaculture initiative, or a bank from lending in support of an existing feed lotting operation. A Queensland mineral exploration company might now find it more difficult to attract a suitably qualified management team, and landholders may now find another reason to resist entry into a compensation agreement with a CSG company.

Undoubtedly, none of these outcomes were contemplated or intended by the Queensland Government in introducing the Bill. This may be a consequence of the seemingly urgent way in which the Bill has been prepared, and the lack of consultation preceding its introduction to the Parliament.

The Bill has been referred to the Agriculture and Environment Committee. Submissions may be made until 31 March 2016, with a report due on the 15th of April.